Q3 Comp Store Sales Up 5% in the U.S. and Americas, 7% in China and 4%
Globally

Consolidated Net Revenues Up 8% to Q3 Record $5.7 Billion

GAAP Earnings Per Share Total $0.47; Non-GAAP Earnings Per Share Expand
to $0.55

Company to Assume Full Ownership of East China JV and Operate all Stores
in Mainland China

SEATTLE--(BUSINESS WIRE)--
Starbucks Corporation (NASDAQ:SBUX) today reported financial results for
its 13-week fiscal third quarter and 39-week fiscal year to date ended
July 2, 2017. Fiscal 2017 and fiscal 2016 GAAP results include items
which are excluded from non-GAAP results. Please refer to the
reconciliation of GAAP measures to non-GAAP measures at the end of this
release for more information.

Q3 Fiscal 2017 Highlights

Global comparable store sales increased 4%

Americas comp store sales increased 5%

U.S. comp store sales increased 5%, driven by a 5% increase in
average ticket

U.S. average ticket increased 4% - transactions grew 1% after
adjusting for the estimated impact of order consolidation
following the shift in the Starbucks Rewards™ loyalty program
from a frequency-based to spend-based model in Q3 FY16

The company opened 575 net new stores globally, bringing total store
count to 26,736 across 75 countries

Starbucks Rewards membership up 8% year-over-year, to 13.3 million
active members

Starbucks Rewards represented 36% of U.S. company-operated sales

Mobile Payment increased to 30% of transactions in U.S.
company-operated stores

Mobile Order and Pay increased to 9% of transactions in U.S.
company-operated stores

The company repurchased 3.5 million shares of common stock in Q3 FY17;
approximately 95 million shares remain available for purchase under
current authorizations

The Board of Directors declared a cash dividend of $0.25 per share,
payable on August 25, 2017, to shareholders of record as August 10,
2017

“Starbucks leveraged food and beverage innovation, an elevated in-store
experience and personalized digital connections to our customers to
deliver another quarter of record financial and operating performance,
despite the softness impacting our principal sectors overall,” said
Kevin Johnson, Starbucks president and ceo. “Continued focus on
execution against our strategic priorities enabled us to gain share and
positions us well for the future.”

"Starbucks once again reported record operating and financial
performance in Q3 - reflecting the back-half acceleration we've been
anticipating," said Scott Maw, Starbucks cfo. "Nonetheless, despite
posting record performance in Q3 and further extending our lead compared
to the industry overall, the combination of trends in the quarter and
ongoing macro pressures impacting the retail and restaurant sectors has
us a bit more cautious going into Q4."

Starbucks also announced several strategic actions to optimize its store
portfolio, strengthen its core, accelerate execution against its
long-term growth strategy and further increase returns on capital.

Company to Assume Full Ownership of the Mainland China Market

Starbucks earlier today announced plans to consolidate its business
operations across Mainland China by acquiring the 50% of Shanghai
Starbucks Coffee Corporation that it didn’t already own from JV partners
Uni-President Enterprises Corporation ("UPEC") and President Chain Store
Corporation ("PCSC"). Customers in China have embraced the Starbucks
brand and customer experience since the company opened its first store
in the market 18 years ago. Starbucks stores in China are among the most
innovative, coffee-forward Starbucks stores in the world, consistently
generating strong revenue and same-store sales growth, record AUV’s and
world-leading returns on investment. Mainland China is Starbucks largest
and fastest growing international market with 2,800 stores in 130
cities, employing nearly 40,000 partners. Through this acquisition, the
largest single acquisition in the company's history, Starbucks will
assume 100% ownership of approximately 1,300 Starbucks stores in 25
cities in the Shanghai, Jiangsu and Zhejiang Provinces. Also as
announced earlier today, concurrently with the purchase of the East
China JV, UPEC and PCSC will acquire Starbucks 50% interest in President
Starbucks Coffee Taiwan Limited, and assume 100% ownership of Starbucks
operations in Taiwan. Founded in 1997, the Taiwan JV currently operates
approximately 410 Starbucks stores in Taiwan.

Company to Close all 379 Teavana Retail Stores

As reported on the Q2 call, many of the company’s principally mall-based
Teavana retail stores have been persistently underperforming. Following
a strategic review of the Teavana store business, the company concluded
that despite efforts to reverse the trend through creative merchandising
and new store designs, the underperformance was likely to continue. As a
result, Starbucks will close all 379 Teavana stores over the coming
year, with the majority closing by Spring 2018. The approximately 3,300
partners impacted by these closures will receive opportunities to apply
for positions at Starbucks stores, as Starbucks remains on track to
create 240,000 new jobs globally and 68,000 in the U.S. over the next
five years.

Financial Targets

The company will discuss updates to its Q4 and full year fiscal 2017
financial targets on its third quarter fiscal 2017 earnings conference
call today.

(2) Company-operated stores represent 18% of the EMEA
segment store portfolio as of July 2, 2017.

Operating Results

Quarter Ended

Change

($ in millions, except per share amounts)

Jul 2, 2017

Jun 26, 2016

Net New Stores

575

474

101

Revenues

$5,661.5

$5,238.0

8%

Operating Income

$1,044.2

$1,022.3

2%

Operating Margin

18.4%

19.5%

(110) bps

EPS

$0.47

$0.51

(8)%

Consolidated net revenues were $5.7 billion in Q3 FY17, an increase of
8% over Q3 FY16. The increase was primarily driven by incremental
revenues from the opening of 2,341 net new stores over the past 12
months and 4% growth in global comparable store sales.

Consolidated operating income grew 2% to $1,044.2 million in Q3 FY17, up
from $1,022.3 million in Q3 FY16. Consolidated operating margin declined
110 basis points to 18.4% primarily due to goodwill and store asset
impairments, which drove a 210 basis point decline, largely related to
the change in strategic direction for Teavana. Excluding these
impairments, margin expanded by 100 basis points driven primarily by
sales leverage, partially offset by increased partner investments,
largely in the Americas segment.

Q3 Americas Segment Results

Quarter Ended

Change

($ in millions)

Jul 2, 2017

Jun 26, 2016

Net New Stores

244

194

50

Revenues

$3,991.9

$3,645.5

10%

Operating Income

$974.8

$898.5

8%

Operating Margin

24.4%

24.6%

(20) bps

Net revenues for the Americas segment were $4.0 billion in Q3 FY17, an
increase of 10% over Q3 FY16. The increase was driven by incremental
revenues from 1,002 net new store openings over the past 12 months and
5% growth in comparable store sales.

Operating income of $974.8 million in Q3 FY17 grew 8% versus $898.5
million in Q3 FY16. Operating margin of 24.4% declined 20 basis points
primarily due to higher investments in our store partners (employees),
the impact of product sales mix and higher commodity costs. These
decreases were largely offset by sales leverage.

Q3 China/Asia Pacific Segment Results

Quarter Ended

Change

($ in millions)

Jul 2, 2017

Jun 26, 2016

Net New Stores

250

209

41

Revenues

$840.6

$768.2

9%

Operating Income

$223.8

$182.8

22%

Operating Margin

26.6%

23.8%

280 bps

Net revenues for the China/Asia Pacific segment grew 9% over Q3 FY16 to
$840.6 million in Q3 FY17. The increase was primarily driven by
incremental revenues from 1,056 net new store openings over the past 12
months and 1% growth in comparable store sales, partially offset by
unfavorable foreign currency translation.

Q3 FY17 operating income of $223.8 million grew 22% over Q3 FY16
operating income of $182.8 million. Operating margin expanded 280 basis
points to 26.6% primarily driven by the transition to China's value
added tax structure in Q3 FY16. Also contributing was higher income from
our joint venture operations in the region.

Q3 EMEA Segment Results

Quarter Ended

Change

($ in millions)

Jul 2, 2017

Jun 26, 2016

Net New Stores

87

77

10

Revenues

$249.9

$273.4

(9)%

Operating Income

$9.8

$29.9

(67)%

Operating Margin

3.9%

10.9%

(700) bps

Net revenues for the EMEA segment were $249.9 million in Q3 FY17, a 9%
decrease versus Q3 FY16. The decrease was primarily driven by the
absence of revenue related to the sale of our Germany retail operations
in Q3 FY16 as part of the ongoing shift to more licensed stores in the
region, as well as unfavorable foreign currency translation. Partially
offsetting these decreases were incremental revenues from the opening of
311 net new licensed stores over the past 12 months.

Operating income of $9.8 million in Q3 FY17 declined 67% versus
operating income of $29.9 million in Q3 FY16. Operating margin declined
700 basis points to 3.9% due to a partial impairment of goodwill for our
Switzerland market, which drove a 720 basis point decline. The remaining
20 basis point expansion was driven by leverage due to the shift in the
portfolio towards more licensed stores, primarily driven by the sale of
our Germany retail operations in Q3 FY16, and was partially offset by
unfavorable foreign currency exchange.

Q3 Channel Development Segment Results

Quarter Ended

Change

($ in millions)

Jul 2, 2017

Jun 26, 2016

Revenues

$478.7

$440.8

9%

Operating Income

$210.2

$187.8

12%

Operating Margin

43.9%

42.6%

130 bps

Net revenues for the Channel Development segment grew 9% over Q3 FY16 to
$478.7 million in Q3 FY17. The increase was primarily driven by higher
international sales, increased sales of premium single-serve and
packaged coffee products, and higher foodservice sales.

Operating income of $210.2 million in Q3 FY17 increased 12% compared to
Q3 FY16. Operating margin expanded 130 basis points to 43.9% primarily
driven by lower coffee costs and higher income from the North American
Coffee Partnership.

Q3 All Other Segments Results

Quarter Ended

Change

($ in millions)

Jul 2, 2017

Jun 26, 2016

Net New Stores

(6)

(6)

0

Revenues

$100.4

$110.1

(9)%

Operating Loss

$(112.3)

$(14.9)

654%

All Other Segments primarily includes Teavana-branded stores, Seattle’s
Best Coffee, as well as Starbucks Reserve® and Roastery
businesses. The increase in the operating loss in Q3 FY17 compared to Q3
FY16 was primarily due to the goodwill and asset impairment charges as a
result of our strategy to focus on Teavana tea within Starbucks stores.

(2) Company-operated stores represent 18% of the EMEA
segment store portfolio as of July 2, 2017.

Operating Results

Three Quarters Ended

Change

($ in millions, except per share amounts)

Jul 2, 2017

Jun 26, 2016

Net New Stores

1,651

1,352

299

Revenues

$16,688.5

$15,604.7

7%

Operating Income

$3,112.1

$2,944.5

6%

Operating Margin

18.6%

18.9%

(30) bps

EPS

$1.43

$1.35

6%

Conference Call

Starbucks will hold a conference call today at 2:00 p.m. Pacific Time,
which will be hosted by Kevin Johnson, president and ceo; Matt Ryan,
chief strategy officer; and Scott Maw, cfo. The call will be webcast and
can be accessed at http://investor.starbucks.com.
A replay of the webcast will be available until end of day Saturday,
August 26, 2017.

About Starbucks

Since 1971, Starbucks Coffee Company has been committed to ethically
sourcing and roasting high-quality arabica coffee. Today, with
stores around the globe, the company is the premier roaster and retailer
of specialty coffee in the world. Through our unwavering commitment to
excellence and our guiding principles, we bring the unique Starbucks
Experience to life for every customer through every cup. To share in
the experience, please visit us in our stores or online at news.starbucks.com
or www.starbucks.com.

Forward-Looking Statements

This release contains forward-looking statements relating to certain
company initiatives, strategies and plans, as well as trends in or
expectations regarding our diversified business model, the strength,
resilience, momentum and potential of our business, operations and
brand, our customer base, our innovation, growth and growth
opportunities and related investments, revenues, operating margins,
comparable store sales and transactions, net new stores and their
performance, our Starbucks Reserve® Roasteries and Starbucks Reserve®
stores, return to shareholders, and our strategic, operational and
digital moves, including the purchase of the remaining 50% ownership of
the East China market and the closure of Teavana stores. These
forward-looking statements are based on currently available operating,
financial and competitive information and are subject to a number of
significant risks and uncertainties. Actual future results may differ
materially depending on a variety of factors including, but not limited
to, fluctuations in U.S. and international economies and currencies, our
ability to preserve, grow and leverage our brands, potential negative
effects of incidents involving food or beverage-borne illnesses,
tampering, contamination or mislabeling, potential negative effects of
material breaches of our information technology systems to the extent we
experience a material breach, material failures of our information
technology systems, costs associated with, and the successful execution
of, the company’s initiatives and plans, including the integration of
Starbucks Japan, the purchase of the remaining 50% ownership of the East
China market and the closure of Teavana stores, the acceptance of the
company’s products by our customers, the impact of competition, coffee,
dairy and other raw materials prices and availability, the effect of
legal proceedings, and other risks detailed in the company filings with
the Securities and Exchange Commission, including the “Risk Factors”
section of Starbucks Annual Report on Form 10-K for the fiscal year
ended October 2, 2016. The company assumes no obligation to update any
of these forward-looking statements.

Management excludes Teavana related goodwill and store asset
impairment and Switzerland goodwill impairment. These items do not
contribute to a meaningful evaluation of the company’s future
operating performance or comparisons to the company’s past operating
performance.

Starbucks Japan acquisition-related items

Management excludes Starbucks Japan acquisition-related transaction
costs as these items do not reflect expected future expenses and do
not contribute to a meaningful evaluation of the company's future
operating performance or comparisons to the company's past operating
performance. In addition, management excludes Starbucks Japan
integration costs and amortization of the acquired intangible assets
when evaluating performance because these expenses are not
representative of our core business operations. Although these items
will affect earnings per share beyond the current fiscal year, the
majority of these costs will be recognized over a finite period of
time. More specifically, integration costs are expected to be
concentrated in the first several years post-acquisition.
Additionally, the amounts of the acquired intangible assets are
specific to the transaction, and the related future amortization was
fixed at the time of acquisition and generally cannot subsequently
be changed or influenced by management.

Sale of Germany retail operations

Management excludes the net gain, associated costs and changes in
estimated indemnifications related to the sale of our Germany retail
operations as these items do not reflect future gains, losses or tax
impacts and do not contribute to a meaningful evaluation of the
company's past or future operating performance.

Other tax matters

Management excludes incremental tax benefits in the U.S. as these
tax benefits do not contribute to a meaningful evaluation of the
company's past or future operating performance.

Non-GAAP operating income, non-GAAP operating margin and non-GAAP EPS
may have limitations as analytical tools. These measures should not be
considered in isolation or as a substitute for analysis of the company's
results as reported under GAAP. Other companies may calculate these
non-GAAP financial measures differently than the company does, limiting
the usefulness of those measures for comparative purposes.

STARBUCKS CORPORATION

RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES

(unaudited)

Quarter Ended

Jul 2,2017

Jun 26,2016

Change

Consolidated

Operating income, as reported (GAAP)

$

1,044.2

$

1,022.3

2.1%

Goodwill and other asset impairments(1)

120.2

—

Starbucks Japan acquisition-related items - other(2)

14.0

14.5

Costs incurred on sale of Germany retail operations(3)

—

2.8

Non-GAAP operating income

$

1,178.4

$

1,039.6

13.4%

Operating margin, as reported (GAAP)

18.4

%

19.5

%

(110) bps

Goodwill and other asset impairments(1)

2.1

—

Starbucks Japan acquisition-related items - other(2)

0.2

0.3

Costs incurred on sale of Germany retail operations(3)

—

0.1

Non-GAAP operating margin

20.8

%

19.8

%

100 bps

Diluted net earnings per share, as reported (GAAP)

$

0.47

$

0.51

(7.8)%

Goodwill and other asset impairments(1)

0.08

—

Starbucks Japan acquisition-related items - other(2)

0.01

0.01

Sale of Germany retail operations(3)

—

(0.02

)

Income tax effect on Non-GAAP adjustments(4)

(0.02

)

—

Other tax matters(5)

—

(0.01

)

Non-GAAP net earnings per share

$

0.55

$

0.49

12.2%

China/Asia Pacific (CAP)

Operating income, as reported (GAAP)

$

223.8

$

182.8

22.4%

Starbucks Japan acquisition-related items(2)

13.9

13.8

Non-GAAP operating income

$

237.7

$

196.6

20.9%

Operating margin, as reported (GAAP)

26.6

%

23.8

%

280 bps

Starbucks Japan acquisition-related items(2)

1.7

1.8

Non-GAAP operating margin

28.3

%

25.6

%

270 bps

EMEA

Operating income, as reported (GAAP)

$

9.8

$

29.9

(67.2)%

Goodwill impairment(1)

17.9

—

Costs incurred on sale of Germany retail operations(2)

—

2.8

Non-GAAP operating income

$

27.7

$

32.7

(15.3)%

Operating margin, as reported (GAAP)

3.9

%

10.9

%

(700) bps

Goodwill impairment(1)

7.2

—

Costs incurred on sale of Germany retail operations(3)

—

1.0

Non-GAAP operating margin

11.1

%

12.0

%

(90) bps

Quarter Ended

Jul 2,2017

Jun 26,2016

Change

All Other Segments

Operating income, as reported (GAAP)

$

(112.3

)

$

(14.9

)

653.7%

Goodwill and other asset impairments(1)

102.3

—

Non-GAAP operating income

$

(10.0

)

$

(14.9

)

(32.9)%

Operating margin, as reported (GAAP)

(111.9

)%

(13.5

)%

(9,840) bps

Goodwill and other asset impairments(1)

101.9

%

—

Non-GAAP operating margin

(10.0

)%

(13.5

)%

350 bps

(1) Represents goodwill impairment and other asset
impairment charges of $69.3 million and $33.0 million,
respectively, associated with our Teavana-branded stores within
our All Other Segments and goodwill impairment of $17.9 million
related to our Switzerland retail business within our EMEA segment.

(2) Includes ongoing amortization expense of acquired
intangible assets and transaction and integration costs, such as
incremental information technology (“IT”) and compensation-related
costs associated with the acquisition.

(3) Represents the net gain on the sale of our Germany
retail operations, which occurred in Q3 FY16. The net gain was
subsequently adjusted for estimated indemnifications associated
with the sale.

(4) Income tax effect on non-GAAP adjustments was
determined based on the nature of the underlying items and their
relevant jurisdictional tax rates.

(5) Other tax matters include the incremental benefit
from additional domestic manufacturing deductions claimed in our
U.S. consolidated tax returns for periods prior to Q3 FY16.